SECOND AMENDMENT TO RIGHTS AGREEMENT
This Second Amendment to Rights Agreement is entered into as of October
25, 1999 between DAMARK INTERNATIONAL, INC., a Minnesota corporation
("Company"), and NORWEST BANK MINNESOTA, N.A. (the "Rights Agent").
RECITALS
1. The Company and the Rights Agent entered into a Rights Agreement
dated as of April 16, 1998 (the "Rights Agreement"), with respect to the
Shareholder Rights Plan ("SRP") adopted by the Company.
2. The Company and the Rights Agent entered into a First Amendment to
the Rights Agreement dated as of July 15, 1998.
3. The Board of Directors of the Company has authorized a second
amendment to the Rights Agreement for purposes of further modifying the
definition of Acquiring Person.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree to amend the Rights Agreement as follows:
Section 1. MODIFICATION OF DEFINITION OF ACQUIRING PERSON. Section
1(a) is amended to substitute in total for Section 1(a) of the original Rights
Agreement the following:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates
and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 25% or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company,
(iii) any employee benefit plan of the Company or any Subsidiary
of the Company, (iv) any Person holding Common Shares for or
pursuant to the terms of any such plan, or (v) any Person holding
Common Shares issued to that person from the Company in a transfer
approved by the Board of Directors of the Company (which action
shall be effective only with the concurrence of a majority of the
Continuing Directors and only if the Continuing Directors
constitute a majority of the number of directors then in office)
(each of (i) through (v) an "Exempt Person"). Notwithstanding the
foregoing, no Person shall (x) be an "Acquiring Person" as a
result of Common Shares beneficially owned on April 16, 1998, or
(y) become an "Acquiring Person" as the result of an acquisition
of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 25% or more of the Common
Shares of the Company then outstanding; PROVIDED, HOWEVER, that if
a Person, together with all Affiliates and Associates of such
Person, is or shall become the Beneficial Owner of 25% or more of
the
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Common Shares of the Company then outstanding by reason of
either clause (x) or clause (y) of this sentence, and shall
thereafter become the Beneficial Owner of additional Common Shares
representing more than 1% of the Common Shares of the Company,
then such Person shall be deemed to be an "Acquiring Person"
unless within ten days of the determination of such ownership the
Board of Directors of the Company (which action shall be effective
only with the concurrence of a majority of the Continuing
Directors and only if the Continuing Directors constitute a
majority of the number of directors then in office) acts to
approve such ownership. Further, if the Board of Directors of the
Company (which action shall be effective only with the concurrence
of a majority of the Continuing Directors and only if the
Continuing Directors constitute a majority of the number of
directors then in office) determines in good faith that a Person
who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable
a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall
not be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
Section 2. FULL FORCE AND EFFECT. Except as set forth in this Second
Amendment, all other terms of the Rights Agreement shall continue in full force
and effect.
Section 3. GOVERNING LAW. This Second Amendment, the Rights Agreement
and each Right Certificate issued thereunder shall be deemed to be a contract
under the laws of the State of Minnesota and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed entirely within such State.
Section 4. COUNTERPARTS. This First Amendment may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed, as of the day and year first above written.
DAMARK INTERNATIONAL, INC.
/s/ Xxxx X. Xxxx
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By: Xxxx X. Xxxx, Chairman, President and
Chief Executive Officer
NORWEST BANK MINNESOTA, N.A.
/s/ Xxxxx Van Dell
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By: Xxxxx Van Dell, Officer
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